Introduction
This academic work will consider such a phenomenon in international trade as dumping. Moreover, it will focus on the role of the WTO in managing international trade disputes, particularly examining issues related to dumping and anti-dumping legislation. Thus, the phenomenon under study is a process in which a country sells its products, the price of which on the foreign importing market is less than on the domestic one. Due to the fact that countries constantly sell a large number of goods, the studied practice can become a severe threat to the viability of the product’s manufacturer in the importing country.
In addition, it is noted that dumping is one of the forms of price discrimination in economic practice. Despite the fact that the price of the offered goods is reduced in the imported market, this policy gives companies the opportunity to have a competitive advantage over other manufacturers. The primary positive side of resorting to dumping is the spread of goods on the market, the price of which is too low or high for them. However, in this case, the company risks incurring losses, as it can sell goods at a price that is lower than the cost of production.
Dumping in International Trade
Subsidies are one of the critical points of dumping practice in international trade. They are often provided to countries as compensation if the value of the goods does not exceed their cost price. However, in most cases, they can become too expensive for countries, which provokes them to abandon the practice of dumping. Various restrictive measures are applied to limit the spread of this type of activity. However, this may affect increased export costs or limits on the quantity a country will import.
Thus, in order to reduce the likelihood of any harmful or undesirable consequences, countries need to initiate the creation of various anti-dumping measures. One of them is The Anti-Dumping Agreement of the World Trade Organization (WTO) (Anti-dumping, subsidies, safeguards: contingencies, etc., n.d.). This organization is engaged in monitoring the implementation of anti-dumping measures by countries that are members of this community. Thus, the WTO guarantees that in these countries, the probability of dumping occurrence is also reduced, or their occurrence is impossible at all.
In order to accurately determine what actions related to dumping include, the WTO organization has created a specialized list of criteria. It includes definitions of what dumping is, in which cases it is possible, and, if it is found, countries are provided with the necessary information that is necessary to resolve the problem. Another valuable aspect of this organization is the fact that it tries to ensure the most excellent transparency in the tradition provided, just as in its application by other countries.
Many countries view dumping as an inappropriate economic practice. At the same time, the World Trade Organization does not give an exact definition of this phenomenon as positive or negative, as it emphasizes the need for an investigation. Thus, the organization can consider the practice of dumping legitimate. Nevertheless, it becomes the opposite if the foreign country can reasonably provide data that companies resorting to dumping have damaged the activities of local producers. Such aspects as tariffs and quotas, which prevent absolute advantage, also become constraints in anti-dumping policies (Felbermayr and Sandkamp, 2020; Ketterer, 2018). Another measure that limits the practice under study is the conclusion of trade agreements between countries. However, if it does not include any points about the possibility or impossibility of dumping, then it will not be easy to prove its existence and active practices on the part of manufacturers.
Thus, a country can introduce measures to control and regulate dumping only under certain conditions. The main one is to conduct an investigation and bring the necessary evidence (Feinberg and Reynolds, 2018). Henceforth, it is essential to prove that dumping is a severe and harmful practice for the economy and development of the country. The World Trade Organization defines several essential criteria that help in assessing the presence of dumping (Technical information on anti-dumping, n.d.). Any product has a particular value that can be investigated relative to that set by the exporter. In addition, if it is impossible to study this indicator, alternative ones are used, such as the exporter’s production costs, other expenses, and average profit margins.
Among the information that must be provided to prove dumping is a description of products that have fallen under this practice, export price and average value, and an analysis of how imports affect the domestic industry. Therefore, measures can be taken after providing all the necessary information (Prusa, 2021). It includes evidence of dumping cases, a decrease in the productivity and efficiency of local industries that create the same goods, and the fact that these indicators are causally related to each other.
After carrying out these necessary measures, anti-dumping measures are carried out directly. Consequently, when proving the occurrence of a price reduction for the exporting country, the company must negotiate and set the price that will be decided during their course. This value of the product should meet all the necessary requirements so as not to harm the domestic market. The time interval for the implementation of the prescribed measures is set at the rate of five years from the moment the decision of the organization enters into force. At the same time, output decisions on the presence of anti-dumping should be resolved as quickly as possible in cases where the margin of dumping is significantly small. Another condition of this clause is the negligible volume of dumped imports.
Conclusion
In conclusion, this paper considered the issue of the increasing influence of dumping practices. It is worth noting that it is one of the ways of price discrimination. Concerning dumping, there is still no definite opinion on whether it is good or bad to use this approach and how it affects countries. Initiatives such as the World Trade Organization investigate these cases and conduct special studies. At the same time, everyone should emphasize that the practice of dumping has a very negative impact on the country’s domestic market.
Reference List
Anti-dumping, subsidies, safeguards: contingencies, etc. (n.d.) Web.
Feinberg, R.M. and Reynolds, K.M. (2018) ‘How do countries respond to anti‐dumping filings? Dispute settlement and retaliatory anti‐dumping’, The World Economy, 41(5), pp.1251-1268.
Felbermayr, G. and Sandkamp, A. (2020) ‘The trade effects of anti-dumping duties: Firm-level evidence from China’, European Economic Review, 122, p.103367.
Ketterer, T.D. (2018) ‘Anti‐dumping use and its effect on trade liberalisation. Evidence for the European Union’, The World Economy, 41(4), pp.1111-1130.
Prusa, T.J. (2021) ‘On the spread and impact of anti-dumping’, Economic Effects of Antidumping, pp. 45-65.
Technical information on anti-dumping (n.d.) Web.